After a period of relative stability, Bitcoin once again topped the headlines and the attention of investors and experts
Bitcoin Eyes $50K, So What's Fueling Its Rally?
After a period of relative stability, the Bitcoin currency once again topped the headlines and the attention of investors and experts, as it achieved record highs this week that brought it to an all-time high above $48,000 on its way to cross the $50,000 level, so what's the story behind that?
Tesla reveals its investment and support for Bitcoin
At first, it exploded Bitcoin to a new record high on Monday after Tesla revealed that it bought $1.5 billion worth of cryptocurrency in January.
The main cryptocurrency reached $44,900 on Monday from the $38,800 level in its strongest daily performance in more than three years, as investors rejoiced at the entry of the fifth largest company on Wall Street in the cryptocurrency sector, and some expect the currency to continue its upward momentum until the price reaches $100,000, with demand growing in exchange for a limited maximum supply of the leading currency of 21 million units.
Tesla involuntarily launched a similar wave of credit in its filing with the Securities and Exchange Commission, with the leading electric car maker saying it had changed its investment policy to use its reserve cash to buy “alternative reserve assets” like bitcoin.
Moreover, Tesla added that it may start accepting digital currency as payment for the purchase of its future products according to many laws and will be limited in the beginning.
Several analysts agreed that the news of Tesla's adoption of bitcoin indirectly validated the cryptocurrency's $50,000 short-term price target, and one analyst said that Tesla could be the catalyst for the market cap of the leading currency to reach $1 trillion.
Electronic banks join the support
The company's unveiling of the investment and acceptance of the leading digital currency as a payment method is a similar starting point for PayPal's introduction of cryptocurrency on its platform in October, potentially fetching $50,000.
The currency continued its upward momentum this week, after rising above $44,000 following the news of Tesla, it jumped above $48,000 during trading Thursday, continuing its upward momentum, driven by a series of positive news, as Mastercard announced that it will allow its customers to accept payments made in cryptocurrency. Later this year, while BNY Mellon revealed its intention to launch cryptocurrency and other custodial services for institutional players.
The two announcements improved market sentiment around Bitcoin, which was already at a high point after Tesla's $1.5 billion BTC purchase.
On the other hand, bitcoin has shown new signs of rising after stablecoin flows to exchanges continued. When stablecoin flows to exchanges increase, this indicates that marginal capital is returning to bitcoin.
Bitcoin on its way to $100,000
Long-term hopes for the future of the digital currency continue to rise, as investors continue to evaluate US President Joe Biden's $1.9 trillion stimulus proposal, many expecting the US dollar to head further lower after Congress approved expansionary coronavirus aid, In turn, this will cause more major companies sitting on top of billions of dollars in cash reserves to reallocate a portion of bitcoin.
As companies adopt cryptocurrency as a treasury reserve asset in their balance sheets, Michael Saylor, CEO of MicroStrategy, which has more than 72,000 bitcoins in its reserves, said that as companies adopt cryptocurrency as a treasury reserve asset in their balance sheets, they are replacing non-performing assets with the best performing assets, preferring volatile upside over stable consumption.
A professional technical and economic analyst in global financial markets since 2004. He holds a Master’s in Business Administration from the American University in Cairo. He works as an economic writer and technical analyst for many international financial companies. He writes daily economic and technical analyzes for many Arabic and English websites specialized in the field of stock exchanges and financial markets.
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